This document discusses WSO2 Open Banking and moving beyond traditional banking norms. It summarizes the market potential of open banking platforms, how they can access niche "long tail" markets. Key differences between traditional product-focused and platform-focused architectures are outlined. The document also discusses challenges of open banking adoption and how WSO2's open banking solution addresses compliance needs while creating new opportunities.

1. WSO2 Open Banking
Moving Banks beyond the Norm
Paul Rohan
Seshika Fernando
Senaka Fernando

2. Presenters
Paul Rohan
Author of PSD2 in Plain English and Open Banking Strategy
Formation
Seshika Fernando
Head - Financial Solutions, WSO2
Senaka Fernando
Director - Solutions Architecture, WSO2

3. Market Potential
THE CURRENT NORM MOVING BEYOND THE NORM
Product Architecture Platform Architecture
Lock-in potential Traditionally High/reduced by PSD2 Very High
Margins in competitive market
Medium if Low Rivalry/down with
PSD2
Potentially Very High
Market Large Segments Microsegments
Scale Economies Potential High Very High
Customisation by end users Minimal Extensive
Network effects potential Low Very High
Revenue model Lump Sum Sales/Very Infrequent Revenue stream

4. Where are these “microsegments”?
The Long Tail
• The theory is that the economy is increasingly
shifting away from a focus on a relatively small
number of "hits" (mainstream products and
markets) at the head of the demand curve and
toward a huge number of niches in the tail.
• As the costs of production and distribution fall,
especially online, there is now less need to lump
products and consumers into one-size-fits-all
containers.
• In an era without the constraints of physical shelf
space and other bottlenecks of distribution,
narrowly-targeted goods and services can be as
economically attractive as mainstream fare.

5. • Product Businesses focus on the needs of
the mass market in conceiving new
products and services, which they can
deliver with economies of scale and sell in
large volumes.
• A Platform Business aims to capture niche
markets “in the long tail” without having to
attempt to create products and services for
them.
• Instead, App Developers might find the
niche markets lucrative enough to pursue
using the platform as a foundation. The
platform owner can therefore penetrate
many market niches without bearing the
direct costs or risks of dabbling in them
Ecosystems expand markets: Capturing
the “long tail”

6. Strategic Perspective
THE CURRENT NORM MOVING BEYOND THE NORM
Product Architecture Platform Architecture
Understanding of a Good Product
A good product design has
prospects
A good product outside an ecosystem is
irrelevant
Achievement of Coordination
Conventional
command-and-control
Gatekeeping/Process
Control/Metrics/Relationships
Connection of Product Architecture to
Organisation
Products mirror organisation Architecture/Governance must interlock
Competitive focus Better than peer bank
Evolve faster and better than rival
platforms

7. Moving beyond the
norm to “Four Parties”
PSD2
4th
Complementary App or
Service with Client
Consent to instruct
PSD2 3rd
Party acting
as a Platform
Governed by
GDPR not
PSD2
3rd
Regulated Third Party
Provider with
Customer Consent
AISP and/or
PISP
2nd
Consenting Payment
Account User
User
1st
Bank with legally
mandatory APIs
AS PSP
2nd
1st
CLOSED
2nd
1st
OPEN
PSD2
3rd
4th

8. Structural Differences
THE CURRENT NORM MOVING BEYOND THE NORM
Product Architecture Platform Architecture
Use of Business Partners Very rare/small network Potentially Hundreds/Thousands
Dominant costs High Fixed costs
High Fixed Platform/Low Apps/Lower
Variable Both
Multi-sidedness Rare Essential
IP ownership Bank only Dispersed
Pricing Cost-plus Asymmetric across two sides
Value for End User Bank only Ecosystem
Controller of process Bank only Dispersed
Dominant innovator Bank App Developers

9. Management Style
THE CURRENT NORM MOVING BEYOND THE NORM
Product Architecture Platform Architecture
Growth bottleneck
Add customers for specific
products Attracting both sides to Platform
Two Complementary Sides Chosen Not Applicable Fundamental
Innovation mode Deliberate Emergent
Management model
Business Unit Command and
Control Orchestration
Critical success factor Good Bank Management Orchestration
Key tension Bank meeting customer need
Partner Autonomy versus Process
Integration

10. Mirroring Architecture and
Governance
• The way in which a platform is governed
and the way in which it is architected
must be mirror images of each other in
order to be mutually reinforcing.
• If apps are loosely coupled with the
platform, their developers must have
considerable autonomy from the platform
owner.
• If they are tightly integrated with the
platform, the platform owner and app
developers should be tightly integrated in
their work as well.
Platform
Ecosystem Architecture
Platform
Owner
Ecosystem Organisation
App
Developer
App App App App
Developer
App
Developer
Mirror
Images
1 2
Architecture Governance

11. New Data, New Insights, New Journeys,
New Governance
The Norm
1) Data on the customer’s direct
engagement with the bank
2) Insights on standardised customer needs
in the mass-market
3) The customer’s journey once they enter
the bank
4) Very infrequent and rare new
products/channels aimed directly at the
mass market
Beyond the Norm
1) Data on the customer’s ecosystem
activities, obtained with customer consent
2) Newly visible customer needs surfaced
by Developers leveraging Open Banking
3) The journey out into the ecosystem to
insert the bank into the customer’s life
4) Continuous release of large numbers of
APIs for partners and developer
communities

12. PSD2: Recipe for Digital Transformation
● Data moving out of closed legacy systems through Open APIs
● Consolidation of financial data across multiple Banks
● Ability to improve customer experience by making use of specialized skills and
techniques possessed by third parties
● Opportunity to attract new revenue streams through digital products and
services

13. Open Banking: The opportunities
Bank A
Bank B
Bank C
Merchant Bank A
Consolidated
customer account and
payment info across
multiple Banks
TPPTPP

14. Step 1
Comply
Expose data securely
Step 2
Reclaim Loyalty
Become TPP
Step 3
Digitally Transform
Offer services beyond banking
2019 20202018
Plan beyond 2018

15. 15
Build internal and
external developer
ecosystems with an
API marketplace.
Manage identity,
security, and
privacy across
your digital
business.
Make mobile and IoT
devices integral to
your digital business.
Create real-time, intelligent,
actionable business insights
and data products.
Platform enable your digital
business with “micro-services”
and “micro-integrations”.
Open Technology for Agile Digital Business

16. WSO2 Open Banking
● API Manager
● API Security + SCA
● API Analytics
● API Monetization
PSD2 Compliance
● API Integration
● Federated Authentication
● Fraud Detection
● Consolidated API Analytics
● Business KPI Dashboards
TPP Provider
● Web/Mobile App Suite
● Insight Sales
● Required Integration
Recommendations
& Insights

17. https://openbanking.wso2.com/

18. Different views on Open Banking & PSD2
1. PSD2 compliance is a necessity (yet another requirement to meet)
2. Open Banking & PSD2 compliance is a new and exciting opportunity
3. We have been told that there is a model for this, and it would meet our needs
4. We know who/what to follow, let’s give it some time
5. Should we become compliant or not?
6. It really does not apply to us

19. Adoption Challenges | Pain Points
● Deadlines to be met, and limited time to spend on R&D
● New capabilities, unknown suppliers, too little information, lots of risk
● Poor visibility into regional/local regulators’ plans
● Changes and impact on systems, processes, staff and products
● Yet another unplanned expense, what kind of ROI does this bring?
● How to promote the use of new Open Banking technology?

20. The Need and the Opportunity
● Meeting compliance requirements of the regulators
● As a part of being competitive in the market
● Retaining customers by providing a better/superior service
● Expanding into a newer and broader financial ecosystem
● Stronger integration with upstream and downstream partners
● Better insights into how to optimise the business

21. The value of using WSO2
● Proven track record of working with financial institutions of all sizes
● Standards-based API-M/Integration interoperates with COTS or bespoke tech
● Scalable deployment options: on-premise, *aaS/cloud, serverless, or hybrid
● Minimum impact/changes to existing internal systems and B2B integrations
● Structured training programs for IT staff, and focused workshops/hackathons
● Extensive community of local implementation partners
● Commitment to improve products/solution as per EBA and other EU standards
● Ready to use demos to share with your team or to impress your leadership

22. Resources
● More Information - http://wso2.com/solutions/financial/open-banking/
● Try out WSO2 Open Banking - https://openbanking.wso2.com
● Open Banking On Demand Webinar -
http://wso2.com/library/webinars/2017/08/wso2-open-banking-digital-transformation-through
-psd2/
● Open Banking Whitepaper -
http://wso2.com/whitepapers/digital-transformation-through-psd2-and-open-banking/

23. THANK YOU
wso2.com